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Public Citizen documents history of Pharma fraud

The non-profit citizens’ advocacy organization Public Citizen has published a report documenting all the major financial settlements and court judgements between pharmaceutical companies and federal and state governments from 1991 through 2015.

The report provides the most complete view to date of the extent of drug company fraud and other misconduct aimed at Medicare, Medicaid, and other taxpayer-funded healthcare programs in the last quarter century.

Public Citizen found that drug makers entered into 373 settlements totaling $35.7 million in recoveries, including criminal and civil penalties for both federal and state health care programs. The organization noted that only settlements of at least $1 million for the period prior to July 19, 2012, were included in the report’s figures, indicating that the total recoveries are almost certainly higher.

Of the 373 settlements, 140 were federal settlements that recovered $31.9 billion and 233 were state settlements that resulted in returns totaling $3.8 billion.

Public Citizen emphasized a number of other key findings its research revealed:

Financial penalties declined sharply since 2013. In the most recent two-year period (2014-2015), just $2.4 billion in federal financial penalties were recovered, less than one-third of the $8.7 billion in federal penalties collected in 2012-2013 and the lowest two-year total since 2004-2005.

Public Citizen cataloged 20 state settlements totaling $424 million from 2014-2015, but 95 settlements totaling $1.2 billion from 2012-2013. That means during 2014-2015 there was an 80 percent drop in the number of state settlements over the previous two-year period.

Almost all of the decrease in the total number of settlements in 2014 and 2015 could be attributed to the sharp decrease in the number of single-state settlements involving overcharging government health programs, from a combined 73 settlements in 2012 and 2013 to just five in 2014 and 2015, a 93 percent drop.

The most common violation in the 25-year period was overcharging government health care programs. The majority of this fraud targeted state Medicaid programs. However, the unlawful, off-label promotion of drugs was the one violation that resulted in the highest penalties.

A decline in the number of federal settlements involving the unlawful promotion of drugs and medical devices accounted for the sharp decline in financial penalties in 2014-2015. Federal financial penalties from these violations declined 90 percent from about $2.8 billion in 2012-2013 to $263 million in 2014-2015.

Criminal penalties, all of which were federal during the 25-year period analyzed, dropped more than 98 percent from $2.7 billion in 2012-2013 to $44 million in 2014-2015.

Fifty-eight percent of the federal settlements (81 of 140) and 71 percent of federal penalties ($22.8 billion out of $31.9 billion) were the result of False Claims Act cases initiated by whistleblowers in the 25-year period. There were far fewer whistleblower settlements and penalties on the state level.
According to Public Citizen, just 17 of 233 (7 percent) state settlements and $793 million of $3.8 billion (21 percent) in state financial penalties originated from whistleblower cases. Of the state recoveries, Texas accounted for nine of 17 (53 percent) settlements and $409 million of $793 million (52 percent) in financial penalties.

GlaxoSmithKline and Pfizer reached the most settlements (31 each) and paid the most in financial penalties — $7.9 billion and $3.9 billion, respectively — to the federal and state governments.

Johnson & Johnson, Merck, Abbott, Eli Lilly, Teva, Schering-Plough, Novartis, and AstraZeneca also paid more than $1 billion in financial penalties. Thirty-one companies entered into repeat settlements with the federal government during the period analyzed, with Pfizer (11), Merck (9), GlaxoSmithKline, Novartis, and Bristol-Myers Squibb (8 each) finalizing the most federal settlements.

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